Should You Link Your RuPay Credit Cards to Make UPI Payments?

As you know, a credit card works on a deferred payment basis, which means you can use the product or service today and pay for it later, without extra charges. Besides, credit cards offer attractive offers and discounts for purchases made with certain merchants. Hence, many individuals prefer to use their credit cards for luxurious purchases and day-to-day transactions. However, currently, the UPI does not allow linking credit cards for making payments. You can perform UPI transactions by linking your Savings Accounts or Current Accounts through debit cards.

But, here's good news for credit card users who prefer to use the UPI method. In the Statement of Development and Regulatory Policies, released after the monetary policy meeting, the RBI said, "UPI has become the most inclusive mode of payment in India. Currently, over 26 crore unique users and 5 crore merchants are onboarded on the UPI platform. In May 2022 alone, 594.63 crore transactions amounting to ₹10.40 lakh crore were processed through UPI. UPI currently facilitates transactions by linking Savings/Current Accounts through Debit Cards of users. The interoperability of PPIs has also facilitated access of PPIs to the UPI payment system for undertaking transactions. In order to further deepen the reach and usage, it is proposed to allow the linking of credit cards to UPI. To start with, RuPay credit cards will be enabled with this facility. This arrangement is expected to provide more avenues and convenience to the customers in making payments through the UPI platform. This facility would be available after the required system development is complete. Necessary instructions will be issued to NPCI separately."

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So, once the system is ready, you will be able to link your credit card to the UPI, just as you link your savings or current account to the UPI. However, initially, this option will be available only to RuPay Credit Cards. This can affect the Visa and Mastercard, which are dominating the international credit card market, and help in increasing the penetration of homegrown RuPay Credit Cards.

The government is taking the necessary measures to increase the penetration of the RuPay cards. RuPay Debit Cards have a good market share as these cards are issued to the savings accounts opened under Jan Dhan Yojana. Besides, the Public Sector Undertaking (PSU) banks actively promote RuPay cards. However, the RuPay Credit Cards do not have a good market share yet. Apart from that, the RuPay Credit Cards have a lower transaction volume compared to Visa and Mastercard credit cards. Therefore, this step taken by the RBI will help in increasing the RuPay Credit Card penetration and change the credit card game in India.

Here's a list of popular mobile apps with UPI features:

• BHIM

• PayTM

• PhonePe

• Uber

• Google Pay

• MobiKwik

• SBI Pay

But is it wise to link your RuPay Credit Cards to make UPI payments?

The permission to link your credit cards to make UPI payments is undoubtedly going to be a game-changer in digital payments. However, it is crucial to make wise use of the facility. As you do not have to spend the actual money from your pocket, you tend to spend more than your budget. The ease and convenience of using credit cards for UPI payments can increase your shopping habits. This can make you forget the debt you have created and tempt you to splurge more. Lack of financial discipline can make you fall into a debt trap.

However, you might not prefer to shop if you had to pay for the same purchases in cash or through your bank account, which means you fall for the trap created by credit cards and spend unnecessarily to impress others. To avoid this, it is advisable to prefer linking your bank account to make UPI payments and use your credit card UPI only for emergencies.

Warm Regards,
Ketki Jadhav
Content Writer